10 years later: How the Mad Cow crisis changed an industry and a province (with videos)

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SUNDRE — As Jason Bradley saddles his horse to ride out to check on a herd of Scottish Highland cattle, he relays a bit of homespun lore.

“There’s an analogy as a cowboy. If you’re not looking where you’re riding, if you’re just always looking behind you to see what you missed, you’re going to end up in a wreck,” he says.

The Sundre-area rancher has always been one to look to the future and not to the past. Under his management, Red Deer River Ranches — a 118-year-old cattle ranch in the foothills of the Rockies — has made major changes, transitioning from a traditional cow-calf operation to an all-natural ranch that sells beef directly to consumers. He has also diversified by creating a guest ranch on the property. Each year, 800 visitors come seeking peace and quiet and the authentic Western lifestyle.

On a glorious May day, with the sun sparkling on the Red Deer River and a gentle breeze stirring the grasses, Bradley finds it easy to be hopeful about his future on the ranch. But there have been darker days, for him and his thousands of counterparts around the province. Ten years ago come Monday, a discovery was made that shook the beef industry to its very core.

Bradley can’t recall where he was or what he was doing that day in 2003 when the Canadian Food Inspection Agency confirmed a case of BSE, or mad cow disease, had been discovered in northern Alberta.

What he does remember is how his anxiety gradually escalated throughout the following weeks, as auction marts across the province cancelled sales and international borders remained closed to Canadian beef.

For Bradley, Canada’s BSE crisis didn’t arrive with the sudden shock of a car accident or natural disaster, but with the slow-growing realization that the future of his whole industry was in jeopardy.

“It was day after day after day of things unravelling,” he says. “It was like your whole business and whole reason for being was completely under attack. Everything that you knew, in terms of the way to do business, was gone.”

What would eventually become one of the worst crises in Canadian agriculture history began quietly in late January 2003, when Marwyn Peaster, a former catfish farmer from Mississippi trying his hand at cattle ranching in Alberta, sent a sick cow to a local slaughterhouse. The cow was so ill it could no longer stand up — a “downer” in industry terms. Deeming the cow unfit for human consumption, an inspector shipped its head for testing; the rest of the carcass was to be rendered into pet food and pig and poultry feed.

Peaster — notoriously media shy at the time of the incident, later moved back to Mississippi and is now in Oregon.

The Mennonite farmer, who was 30 in 2003, couldn’t have known as he prepared for spring on his ranch near Wanham, Alta., that year that he would soon be at the centre of a major international news story. He couldn’t have known that four months after loading that sick cow into the back of a truck, the animal’s brain cells would test positive in a provincial laboratory for bovine spongiform encephalopathy.

Unlike Bradley, Dennis Laycraft — executive vice-president of the Canadian Cattlemen’s Association — remembers exactly what he was doing that fateful day. It was the May long weekend of 2003, and Laycraft was in Chilliwack, B.C., on a family vacation when he got a phone call from then federal Agriculture Minister Lyle Vanclief, telling him a “probable” case of BSE had turned up in Alberta. Laycraft immediately packed his bags and returned to Calgary, to wait for confirmation from the World Reference Laboratory in Britain and prepare for the firestorm that was sure to follow.

Laycraft knew full well what a positive case could mean for the industry. He had followed closely what had happened in the 1980s and 1990s in the U.K., where BSE — a progressive, fatal disease of the central nervous system — had infected millions of animals and devastated the British farming industry. By 2003, more than 100 deaths in the U.K. had been attributed to the human form of BSE, variant Creutzfeldt-Jakob disease, and consumer confidence in beef products had been shattered.

Laycraft says for him, the darkest moments were those first two days when officials were waiting for the results to be confirmed and discussing how to go public with the news.

“It was surreal, to be honest,” Laycraft recalls. “We’d had an animal that had been imported from the United Kingdom in 1993 test positive, and at the time we and the federal government were accused of being almost draconian in our response — we had started monitoring all imported animals, all remaining animals from that herd were destroyed, and their remains were incinerated. We’d gone 10 years since that time without any positives . . . . We honestly felt we’d moved past the risk, so this was totally unexpected.”

On May 20, 2003, a Tuesday, the results came in, and federal and provincial officials summoned the media to a news conference in Edmonton. North America had its first domestic case of mad cow disease.

The impact was immediate and far-reaching. Forty countries shut their borders to Canadian beef.

Truck shipments were halted, auctions were cancelled, and cattle prices plummeted. Feedlot operators with live cattle ready to go had nowhere to sell them. Prior to BSE, Canada had been exporting somewhere between 50 and 60 per cent of its overall production of both beef and live cattle — the majority to the United States. Canada’s beef industry was an export-dependent business, and the customers had disappeared overnight.

Grant Hirsche — a purebred Hereford breeder from the High River area and today a part-owner of Hirsche Fraser Meats in Okotoks — remembers being in Australia for a bull show when his wife phoned to tell him there had been a BSE discovery in Canada.

“Me being an optimist, I said, ‘Oh, well, that’s not going to be a big issue. They’ll get it cleaned up and within a few days it’ll be fine,’ ” Hirsche recalls. “Well, lo and behold, it wasn’t fine.”

Not only was it not fine, it nearly broke him. Prior to BSE, more than 50 per cent of Hirsche’s sales were to international or American customers.

“We had markets all over the world. We were exporting semen to, the last I counted, 37 different countries,” says Hirsche. “So when BSE hit, it was devastating for us. Overnight, our sales totally shut down.”

The domestic market had withered as well. Cow-calf operators who weren’t certain they’d be able to sell their calves in the fall certainly weren’t about to go out and spend a lot of money on a new breeding bull. Hirsche knew he had to do something, or he’d go bankrupt.

The solution he came up with was to sell his own meat. He got the necessary licences, found a small local abattoir that could take four or five cows a week, and contacted a friend who owned an old refrigerated milk delivery truck. Then he chose a day, loaded the truck with frozen hamburger, and parked it at a local High River car dealership.

Hirsche recalls he had decided to sell for 99 cents a pound, since hamburger at that time was going for about $1.29 a pound. But as he drove the truck into town that day, he saw a sign advertising a “BSE Special” at the local grocery store, with ground beef on sale for 69 cents a pound.

His heart sank. And yet, that weekend — in spite of the fact his product was more expensive than the stores — he sold out.

“I had never seen anything like it. People were so supportive, they really wanted to do something to help the farmer,” Hirsche says. “I must have had 100 people ask why I was selling just hamburger. They were willing to buy anything.”

Before long, Hirsche and his partner — fellow rancher Doug Fraser — were selling everything from ground beef and steaks to sausages and jerky. For two years, they sold their homegrown beef at trade shows and out of their truck parked on the side of the highway. Then in 2005, they opened the butcher shop in Okotoks.

Like most new business owners, Hirsch and Fraser found it a tough go at first. Hirsche says they never could have survived without the outpouring of support from the public at that time. Contrary to what many in the industry feared the day the news broke, domestic consumption of beef never went down as a result of BSE — in fact, in 2003, per capita beef consumption actually increased to 32.4 kg, from 30.58 kg in 2002.

It appeared Canadians had decided the risks of BSE were minimal, but the consequences of international trade restrictions — to both the beef industry and the economy as a whole — were huge. That summer, Albertans rallied behind the beef industry, slapping “I Love Alberta Beef” on their bumper stickers and hosting one barbecue after another.

Arno Doerksen, who was chair of the Alberta Beef Producers at the time and still ranches near the southeast community of Gem today, says those gestures did a lot to bolster morale, especially in small rural communities where the entire local economy was dependent on the health of the beef sector.

“There was an outpouring of support that was really remarkable,” Doerksen says. “To see the way Canadians pulled together on this issue, it was touching — no question about it.”

But while Canadians were munching on burgers, and enterprising ranchers like Hirsche were taking matters into their own hands, a higher level political battle was underway.

In Washington, D.C., John Masswohl — then Agriculture Counsellor for the Canadian Embassy — knew he was in for a busy summer the second he got the phone call from a counterpart in Ottawa.

“My immediate thought was, ‘I need to go talk to the Ambassador (Michael Kergin),’ ” Masswohl says. “Usually there’s a chain of command, but I knew this was a big deal.”

While Masswohl and his colleagues in Washington knew their job was to help get the border open again, they weren’t sure what it was going to take.

“Nobody knew, not even the folks at the USDA (United States Department of Agriculture), because they had never reopened to a country that had a case of BSE,” says Masswohl, who today serves as the Canadian Cattlemen’s Association’s director of government and international relations. “The procedures were there for the emergency closure, but there was really no road map for the reopening.”

A month into the crisis, tests on more than 1,400 animals from cattle herds believed to be connected to Peaster’s sick cow had turned up negative for BSE. A team of international scientists — invited by Canadian officials to examine the situation — had completed a review and made a number of recommendations, including reviewing animal feed restrictions, strengthening tracking and tracing systems, and improving disease testing and surveillance. The Canadian government promised a quick response to the recommendations. Outlining the steps Canada has taken to ensure the safety of its beef, officials pressed the U.S. and other governments around the world to lift their trade restrictions.

But even though Canada was convinced it had science on its side, it wasn’t an easy road. In August 2003, the U.S. reopened to boneless beef from animals under 30 months of age — a major coup for Canada and a shot in the arm for the beef industry. But in April 2004, just as the U.S. government agreed to lift restrictions on bone-in and ground beef under 30 months, the American cattle producers’ lobby organization R-CALF obtained a court injunction halting the process.

“I remember the ambassador going to meet with a number of these congressmen and senators (from states where R-CALF was active), and providing them with a bunch of information about why what they were saying was wrong. But if someone’s motivation is to keep you out, and you give them information showing them they’re wrong, then they come out with new information,” Masswohl says. “But I would say the majority of people in the USDA, and the people in scientific positions who wanted to make decisions based on what the science is, realized pretty quickly that, ‘OK, this is a pretty small risk.’ ”

The ensuing legal battle lasted for more than a year, until the U.S. reopened the border to bone-in and under 30 months live cattle in July of 2005. It wasn’t until November 2007 that the U.S. opened its border fully to Canadian beef, resuming imports of animals over 30 months.

While all this was going on, then Alberta Agriculture Minister Shirley McClellan and former premier Ralph Klein — who created an uproar when he told the Western Governors’ Association that any self-respecting rancher facing a potential case of mad cow would have “shot, shovelled and shut up” — worked to tide over a suffering industry. In June 2003, Klein went to the Western Premiers Conference to get support for a federal assistance program. The premiers emerged from the conference urging Ottawa to provide financial aid to help the industry recover from lost revenue. Ten days later, Ottawa announced a $460-million national BSE Recovery Program, cost-shared between the federal and provincial governments.

McClellan says the program was the result of many meetings with agricultural leaders — many of whom were leery of taking any assistance at all, but realized it was the only way to keep the industry afloat.

“I can remember Ralph telling me, you get the industry together and you develop what you believe is the solution with them,” McClellan says. “The beef industry in particular is not an industry that would look to government for anything. . . . I think what maybe made me so proud of these folks, when they were faced with absolute devastation, was the way they would say, ‘OK, we can beat this thing.’ ”

While the opening of the U.S. border marked the end of the crisis, Canada continues to face BSE-related trade restrictions with other markets to this day. There have now been 18 cases of BSE in Canada, the most recent in February 2011. (There have also been four cases in the U.S., the first of which was discovered in December 2003.)

The Canadian Cattlemen’s Association estimates that, all told, the BSE crisis cost the industry between $6 billion and $10 billion. But as difficult as that period was, the industry has made a significant recovery. Of the top 10 international markets for Canadian beef in 2002, trade access has been restored at least in part to all of them. And both the federal and provincial governments continue to lobby holdout countries to reverse their bans.

The vast majority of ranchers and feedlot operators — though they lost a lot of equity — were able to ride out the BSE crisis without going under, and in recent years, cattle prices have strengthened dramatically.

Still, the Canadian beef industry today is not the beef industry of 10 years ago. Producers were still emerging from the nightmare of BSE in 2005 when they were hit with the double whammy of a rising Canadian dollar and soaring feed grain prices — challenges that have defined the second half of the post-BSE era.

The effect of the last decade is visible in the numbers. According to Statistics Canada, the number of farms reporting beef cows in Alberta declined from 28,510 in 2001, to 25,665 in 2006, and 18,618 in 2011. The size of the Canadian cattle herd is about four million head now, a significant decrease from 5.2 million head in early 2003. And where the value of Alberta’s beef exports was pegged at $1.6 billion in 2002, the 2012 figure was just $852 million.

While the BSE crisis is by no means the only factor, it’s part of the reason for these falling numbers.

“There’s always, in the back of people’s minds, this feeling like, ‘What if we got another case of BSE, or something like BSE?’ There’s sort of this ongoing caution that lingers there and I think it maybe does restrict our capacity to expand, a little bit,” says Brian Perillat, manager and senior analyst with Canfax, the marketing division of the Canadian Cattlemen’s Association. “There’s still that psychology, 10 years on, in the guys buying cattle.”

If anything, ranchers today are more aware of their own vulnerability. Hirsche — the purebred breeder turned meat shop owner — likes what he’s doing at his Okotoks store and believes the market for rancher-direct, natural meat products is going to grow. He’s also started to rebuild his purebred herd after a major downsizing in the years following BSE. Last fall, one of his bulls was named overall grand champion at the Canadian Western Agribition.

But Hirsche hasn’t forgotten the lean years of BSE. He says Canada’s beef industry is still far too reliant on the United States for the processing and sale of its product. He points to the havoc wreaked by the temporary closure of one packing plant — XL Foods in Brooks — due to an E. coli scare last fall.

“It is a frustrating situation, because I don’t think we’ve learned. We are in the very same boat that we were,” Hirsche says. “If they ever shut the borders again, for whatever reason, we are back in the exact same situation.”

Back on the Red Deer River Ranch, Jason Bradley says that’s part of the reason he is putting so much effort into building a customer base for his rancher-direct beef. BSE highlighted for him just how vulnerable a cow-calf producer is to international events beyond his control. By choosing to bypass the auction mart and the feedlot and sell directly to consumers, Bradley hopes he has mitigated some of that risk.

“If another thing were to come along like BSE, and the U.S. and other countries were to shut their borders, right now we’re not restricted by that,” Bradley says. “Our beef goes to people in Calgary or Red Deer or Canmore — directly to their houses and into their freezer. One of the things we wanted to avoid was being completely dependent on exporting in such a big, industrial fashion. I don’t want to be held hostage by that anymore.”

BSE kicked off a tough 10 years, Bradley says, and it’s no surprise to him there are fewer Canadians ranching today. He doesn’t expect those numbers to increase anytime soon.

“I see the industry continuing to rightsize. Whoever’s left at the end of this are going to be the survivors, the ones who had the financial wherewithal and the ability to diversify,” he says. “It’s not like it’s going to be easy, in the very short term, to make money in the cattle industry.”

Still, Bradley is determined to stick to that adage about “looking where you’re riding.” Ranching has given him a lifestyle like no other, and he’s convinced the industry has a future for those who have the vision to adapt and change.

“We need to keep making new decisions about how we’re going to stay positive and stay motivated,” he says. “We need to keep that passion and that dream going — that little boy dream of ‘I always wanted to be a cowboy.’ ”

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10 years later: How the Mad Cow crisis changed an industry and a province (with videos)

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